Klarna’s losses soared due to doubling of credit defaults


Klana AB Update

Klarna’s losses increased significantly in the second quarter because the highly valued Swedish “buy first and pay later” company continued its extremely fast growth rate before the possible stock listing.

Fintech, recently Worth 46 billion U.S. dollars In a round of investment led by Japan’s SoftBank, its purchases processed on behalf of retailers in the second quarter increased by two-thirds to US$20 billion.

But its operating loss Soar As credit losses more than doubled in the second quarter, it increased from SEK 890,000 (US$10 million) a year ago to SEK 965 million (US$111 million).

Klarna is one of the few fintech companies that has remained profitable for the first 14 years, but has been Loss since 2019 Because it is expanding rapidly, especially in the United States. As Klarna attracted 20 million customers to use its payment services at retailers such as Nike, H&M and Macy’s, sales in the United States increased by 311% in the first half of the year.

The Swedish fintech company said that when it enters new markets (such as recently launched in New Zealand, France and Spain), credit losses tend to increase. It added Poland last week.

In the first half of the year as a whole, the growth rate of its credit losses was lower than its total volume of goods-credit losses increased by 55%, while the number increased by 77%. Its operating loss in the second quarter of 2020 was significantly lower than that in the first quarter of that year, but Klarna could not immediately explain why this was the case.

Chief Executive Sebastian Siemiatkowski told the Financial Times on Wednesday that he was “satisfied with the development of losses” because credit defaults accounted for The proportion has declined.

He added: “If you are a small bank, your losses will be small. If you are a large bank, you may suffer more losses. While we are developing this bank rapidly, with income and As the trading volume increases, you will suffer more losses.”

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Klarna faces controversy in some countries because critics believe it encourages young people to spend money they don’t necessarily have and then repay it in installments.

Klarna has previously stated that it is working hard to list on the stock market, but there is nothing imminent. Siemiatkowski has said that the United States is a natural place to go public, but also hinted that the United Kingdom is participating. He is lobbying the London government for its potential regulation of the “buy first, pay later” industry.

he Tell The Financial Times stated in May: “With Brexit, London has the opportunity to develop better regulations for the financial industry. This will benefit London, which stands outside the EU…. It is expected that all banks will Move away [from the UK]; I think it’s the opposite. “


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